What happens when contact between a financial institution and its clients is broken off?

When I headed the Federal Council-appointed task force "Switzerland - World War II" in the 1990s, this question occupied me intensely. It lay at the heart of one of Switzerland's biggest foreign-policy crises. Banks, Jewish organizations, and politicians on both sides of the Atlantic then argued over whether our banks had done enough after the war to identify the owners of dormant assets or their heirs.

New awareness created

The crisis of that time has had a lasting impact on Switzerland's handling of dormant assets. In addition to the important and necessary political reassessment, it created an awareness that financial institutions bear a special responsibility when contact with clients is lost. From this, clear rules and a systematic approach to contact-lost and dormant assets gradually emerged.

"Today, the appropriate search for entitled parties is one of banks' core responsibilities."

As early as 1995, the Swiss Bankers Association issued the first guidelines for such cases. With the revision of the Banking Act and the Banking Ordinance in 2015, as well as the guidelines recognized by Finma, the issue was ultimately anchored in law.

Today, the appropriate search for entitled parties is one of banks' core responsibilities, and other financial institutions such as insurers or pension funds also have an interest, for economic or reputational reasons, in bringing the rightful owners together with the assets or benefits to which they are entitled.

However, not all pension institutions seem to be equally advanced. SRF's "Kassensturz" recently reported on around 960,000 contactless accounts with a volume of CHF 6.75 billion, which are managed by the BVG substitute occupational benefit institution without reasonable efforts being made to find the rightful owners.

Swiss solution is considered an international standard

For banks, an asset is considered dormant by law after ten years without documented client contact. Fifty years later, banks must publicly publish balances of more than CHF 500 as well as assets of unknown value. This gives owners and heirs one final opportunity to assert their claims. If no one comes forward, the assets revert to the state.

As a supplement, the Bankers Association established a central contact point at the Banking Ombudsman back in the mid-1990s. Entitled parties can search there for contact-lost and dormant assets, provided they can make a plausible claim. This too has helped ensure that the solution in the Swiss banking sector is still regarded as an international standard today. 

Research opportunities are limited

This describes the legal framework. And over the past decades, significant progress has been made in identifying contact-lost and dormant assets. Clear processes and technical capabilities now ensure that such cases are systematically recognized and recorded. 

The real challenge today is no longer identification and recording, but locating and verifying the entitled parties. The available information is often many years old. Owners have died, many of the entitled heirs live abroad, family circumstances have changed, and evidence is missing or difficult to access. At the same time, this form of research is not part of the core business of banks, insurers, or pension funds, and it is also restricted by regulatory requirements, such as banking secrecy.

Professionalization of the industry 

Financial institutions are therefore increasingly turning to specialized service providers that focus on locating and verifying owners, heirs, and entitled persons.  In Switzerland, providers such as FAST Search AG, Sogeni SA, and Key Findings GmbH have established themselves in recent years. They take on the search, verify the existence of entitled parties, and restore contact.

"Success is now measured by whether financial institutions make full use of the available options."

The increasing professionalization of the industry is also reflected in the results achieved. "Over the past few years, we have been able to create a standard in cooperation on the Swiss financial center that is setting an international example," says Kurt Fröhlicher, managing director of FAST Search AG. The specialization allows his team to successfully complete more than 80 percent of search cases worldwide within tight time frames. For many legally entitled parties, this means a pleasant surprise, as they rediscover assets or claims they were no longer aware of. At the same time, this process contributes to the good reputation of the Swiss financial center.

This professionalization has made a significant contribution to ensuring that regulatory requirements can now be implemented more effectively than they could a few decades ago. The necessary structures and tools are now available. What began as an obligation has become a systematic process that increases the chances of returning assets to their rightful owners. Success is now measured by whether financial institutions make full use of the available options, consistently fulfill their responsibility, and systematically reduce dormant holdings.

Thomas Borer is a management consultant, lobbyist, and former diplomat. From 1996 to 1999, he headed the Switzerland - World War II task force. He then served as Switzerland's ambassador to Germany until 2002. 

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